Budget carrier PT Mandala Airlines has filed for bankruptcy at the Central Jakarta Commercial Court, as it is no longer able to operate or pay its debts.

The company decided to file the case on Dec. 9 in a bid to rescue the interests of shareholders and creditors, to whom it owed Rp 1.5 trillion (US$120.45 million) and Rp 7 billion, respectively, Mandala Airlines lawyer Zaky Tandjung said on Monday.

'This act is to show that we have good faith,' he said as quoted by kontan.co.id. However, Zaky declined to explain why the total amount of its debts was lower than the Rp 2.4 trillion detailed in the 2011 debt postponement petition (PKPU).

On July 1, Mandala decided to cease operations after battling to keep its business alive amid high competition in the aviation industry and surging operational costs.

The decision to stop operations has caused two potential investors, PT Citi-link Indonesia and PT Indonesia AirAsia, to retreat from their plan to acquire Mandala's shares.

Citilink Indonesia is a subsidiary of state-owned airline company PT Garuda Indonesia, while Indonesia AirAsia is part of Malaysia-based airliner AirAsia Berhad.

'We have tried to rise again, but we are not able to face the rising costs of aviation turbine fuel [avtur] and the depreciation of the rupiah,' Zaky said.

Mandala, which operates under the name Tigerair Mandala, is 64.2 percent owned by equity firm Saratoga Capital ' which was cofounded by Sandiaga Uno and Edwin Soeryadjaya ' along with PT Cardig International, and 35.8 percent by the Singapore-based Tigerair Group.

However, Mandala commissioner Hariadi Supangkat rejected the file for bankruptcy, which, he claimed, had 'been done unilaterally by a Singaporean stakeholder without any agreement from the Indonesian counterparts'. (***)